I wouldn't put any money into a 305 IMO. If you can do the job for $250, I would be impressed, but honestly it could also be $250 wasted completely. I can't speak for your financial situation, and I agree that 1800 for a used vortec is ridiculous. You would be a fool to pay that much for a motor. Buy a whole truck for that.
If it was me, and you couldn't find any engine (or parts truck) any cheaper and didn't have enough money to spring for a crate 350, I would really seriously consider just buying another truck. Your frame is already a problem, correct? Sounds very similar to my situation this past fall. Had a truck I sank a lot of money into, with a bad frame, and then the motor started knocking.
I parked it and bought my 3/4 ton for $1200 complete, on the road. Kept my old one for parts. Best decision I made.
Just my 2 cents. I understand if money is tight, but I would really consider my options before putting any money into that engine. Hopefully you get 'er sorted out man.